Crown Central shareholders reject Rosemore merger offer

Crown Central Petroleum Corp. shareholders Thursday rejected a proposed merger with the firm's controlling stockholder, Rosemore Inc., in favor of a possibly sweeter offer from another investor. Organized labor organizations hailed the rejection.


Crown Central Petroleum Corp. shareholders Thursday rejected a proposed merger with the firm's controlling stockholder, Rosemore Inc., in favor of a possibly sweeter offer from another investor. Organized labor organizations hailed the rejection.

Crown has been embroiled in labor disputes for some time. There is a boycott called against the company, caused by a 1996 incident in which Crown Central locked out workers.

"We have been saying all along that Crown's problems...cannot be solved until there is labor peace,'' added PACE International Union spokesperson Joe Drexler.

Many shareholders said Rosemore's offer was too low.

The proposed merger into a Rosemore subsidiary for $9.50/share was rejected when it failed to get the required two-thirds vote at special stockholders meeting. As a result, Crown Central officials terminated the merger agreement with Rosemore and said they would not pursue that strategic transaction.

Instead, they requested a definite proposal from Apex Oil Co. Inc., a Missouri corporation that already owns about 14.7% of Crown's Class A common stock and 3.5% of its Class B common stock. Apex has said it would buy all of Crown's outstanding stock at a cash price of $10.50/share through a fully financed unconditional tender offer, expected to commence by Sept. 29.

Rosemore officials have indicated they would consider a cash offer for the Crown Central stock held by that company.

Meanwhile, Crown Central officials are considering further postponing the company's annual meeting to allow Apex to pursue and complete its tender offer. If Apex does not launch a tender offer by the promised date, Crown Central officials said they would end their search for a buyer and continue to evaluate a broad range of strategic alternatives.

In the interim, they plan to continue to focus on making the company more profitable, less vulnerable to downward cycles in the petroleum refining market, and better able to utilize assets that will best deliver long-term value to its business and its stockholders. That will involve strategic redirection of assets, including selected asset sales; possibly refinancing of debt to increase financial flexibility; and reduction of overhead and costs.

Headquartered in Baltimore since 1930, Crown Central operates two Texas refineries with a total capacity of 152,000 b/d, 327 Crown gasoline stations and convenience stores in the Mid-Atlantic and Southeast US, and 13 product terminals along the Colonial, Plantation, and Texas Eastern Products pipelines.

More in Companies